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🎢Traders Shun On-Chain Leverage In Volatile Market

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Trending in The Defiant

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Cautious Speculation

👀 Traders Shun On-Chain Leverage In Volatile Market

Aave and Compound Liquidated Just $850K Of Collateral As Ether Dropped 25%

By: Aleksandar Gilbert

LIQUIDATIONS DeFi money markets have liquidated tens of millions in crypto collateral following each nosedive in the crypto markets this year. But traders are unscathed in the wake of last week’s industry-wide selloff.

LATEST ACTION Aave and Compound, two of the three largest lending protocols with a combined $14.6B in total value locked, liquidated just $850,000 of collateral in the past week, according to data from The Defiant Terminal. Ether fell 25% during the period after briefly trading above $2,000 on Aug. 14.

HEAVY DOWNTURNS That sum is a far cry from the amounts liquidated during other sharp downturns this year. Meanwhile, centralized exchanges saw over $600M in liquidations last week.

INSOLVENCY Between June 9 and June 13, Ether lost a third of its value as now-defunct hedge fund Three Arrows Capital sold its digital assets in a last-ditch attempt to remain solvent. On June 13, Aave liquidated more than $34M in collateral, while LUSD issuer Liquity liquidated $22M. Five days later, after Ether dropped below $1,000, Liquity sold off another $77M.


Nonfungible Margin Calls

📉 BendDAO Passes Emergency Changes Amid Liquidations

NFT Lending Protocol Relaxes Bidding Requirements

By: Owen Fernau

PULLBACK The bear market shows no mercy to products developed with “up only” mechanics.  

NEWS Last week, it came to light that four Bored Ape Yacht Club (BAYC) NFTs were up for liquidation in a major stress test for the digital assets that were once worth over $400,000 a pop earlier this year. 

MARGIN CALLS Users borrowed Ether against their Bored Apes using a protocol called BendDAO, which facilitates NFT-backed lending. As the value of the Apes fell, the ratio of the debt borrowed against that value grew to the point that Bored Apes, as well as tens of Mutant Apes, all still worth over $10,000, became eligible for liquidation.

EMERGENCY MEASURES Now, the BendDAO community has passed a proposal to tweak the levels at which underwater loans will be liquidated. It passed with 97% of voters in favor. 


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Balancer Wars

📈Aura Capitalizes On Race for Balancer Liquidity

Yield Optimizer Controls A Third Of veBAL Supply

By: Owen Fernau

LIQUIDITY WARS Balancer, another automated market maker (AMM) that started as a research project in 2018, is gaining enough steam to attract its own protocol geared towards optimizing native token rewards. 

YIELD OPTIMIZER Enter Aura Finance, whose AURA token has quietly jumped 18.9% in the past week to $3.65. The token has been on a longer-term uptrend as well — it’s up 157.5% in the past 60 days. Aura’s TVL stands at $316M, making it the 33rd-largest DeFi protocol.

VOTING POWER Aura holds 29% of the current veBAL supply, so the project exerts enormous influence over where BAL rewards are allocated.


Capital Raise

💸 Ready Player Me Raises $56M To Expand Cross-Platform Avatars

Series B Led By a16z’s $600M Games Fund One

By: Jason Levin

VIRTUAL WEARABLES Would you rather buy an outfit that works in 1 game or 3,000? Metaverse composability startup Ready Player Me is betting on users choosing the second answer.

HEFTY ROUND Ready Player Me raised a $56M Series B round led by Andreessen Horowitz’s a16z Games Fund One and a16z Crypto for its technology that lets over 3,000 video games have interoperable avatars, the company said in an Aug. 23 announcement. Founded in May 2020, Ready Player Me has created over five million avatars and worked with brands like RTFKT, Adidas, Dior, VRChat, and more. 

AVATARS Ready Player Me lets gamers use their avatar across multiple video games rather than each video game having its own avatars and characters. The avatar creation system is the result of a proprietary database of 20,000+ face scans captured with the company’s own 3D scanners.

VIRTUALIZATION “People spend more and more time in virtual worlds every year. 12-15 year olds today hang out with their friends in games and this trend will continue. Games are the new social platforms,” Ready Player One co-founder Timmu Tõke told The Defiant. “In 5-10 years Ready Player Me is the avatar interoperability layer for the metaverse. We help people create awesome avatars and travel with them across the metaverse.”


The Tube

📺 Tornado Cash Alternatives


🔗 Three Arrows Liquidators Get Singapore Nod to Probe Crypto Fund: Bloomberg

Three Arrows Capital Ltd.’s liquidators secured a key court decision in Singapore that may give them greater insight into the collapsed crypto hedge fund’s remaining assets in a major jurisdiction, people with knowledge of the matter said. The Singapore High Court on Monday granted a petition by advisory firm Teneo, which in June was appointed by a British Virgin Islands court to liquidate Three Arrows, to recognize the liquidation order in the country, the people said.

🔗 Crypto Lender Celsius Countersues KeyFi for ‘Gross Mismanagement’: Decrypt

Troubled crypto lending platform Celsius filed a countersuit in United States Bankruptcy Court on Tuesday against Jason Stone and his company KeyFi. In the filing, Celsius alleges Stone falsely represented himself as a pioneer and expert in coin staking and decentralized finance (DeFi) investments. “Unfortunately, Defendants Stone and KeyFi, Stone’s majority-owned corporate vehicle, proved themselves incapable of deploying coins profitably and appear to have lost thousands of Celsius coins through their gross mismanagement,” Celsius says.

🔗 Ontario securities regulator warns against Kucoin in latest alert: The Block

The Ontario Securities Commission (OSC) has issued another consumer alert calling out a swath of crypto firms, including Kucoin and its affiliates, for not being registered to deal in the Canadian province.

The OSC issued a similar alert earlier this month that also named Kucoin as an unregistered entity.

Trending in The Defiant

Fei Community Up In Arms Over Dissolution Plan

Amid “mounting technical, financial, and future regulatory risks,” the team behind Fei, the 17th largest stablecoin by market capitalization, is ready to call it quits. But their proposal, which would only partially repay victims of an $80M hack and compel Fei holders to redeem their tokens for DAI has been met with fury from some of the project’s earliest backers. 

Feds Didn’t Just Sanction Tornado — They Forgot Code is Free Speech

The U.S. Department of the Treasury’s sanction of Tornado Cash on Aug. 8 was a remarkable development. It wasn’t just the sweeping scope of the action. Pulling the plug on an entire crypto platform isn’t something you see every day. It was the fact that the authorities blacklisted a piece of code — not a person or a corporate entity. 

GitPOAP Raises $4.28M To Build Out On-Chain Credentials

GitPOAP has raised $4.28M in a pre-seed round to grow its credentialing platform that lets projects issue POAPs to recognize contributors on GitHub, the Microsoft-owned developer platform used by over 83M users including most web3 projects. 

🧑‍💻 ✍️ Stories in The Defiant are written by Owen Fernau, Aleksandar Gilbert, Claire Gu, Samuel Haig, Jason Levin, and yyctrader, and edited by Edward Robinson, yyctrader and Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila, edited by Alp.

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